Agence France Presse
April 7, 2002

The Asian Development Bank (ADB) is reviewing its policy watchdog mechanism after coming under fire for a controversial wastewater management project it financed in Thailand, officials say.

MANILA: The 750-million dollar plant in Samut Prakarn province southeast of Bangkok is more than 80 percent completed but has been dogged by allegations of corruption and violation of environmental laws since its launching in 1995.

Villagers in the most-heavily industrialised and polluted province in Thailand, backed by Greenpeace and other non-governmental groups, have charged that ADB violated its own policies on corruption, environmental assessment and good governance in financing the project.

After an unprecedented one year probe into the allegations, ADB President Tadao Chino has called for a revamp of the bank’s so-called inspection policy.

The “watchdog” policy mechanism ensures that the bank adheres strictly to its policies and procedures for planning and implementing projects it finances.

“Now that this inspection in respect of Samut Prakarn has been concluded, it is both timely and important that we move on, without further delay, to focus on the improvements of the inspection function, a key instrument of governance,” Chino told a recent meeting of the bank’s board of directors.

A steering committee and a working group has been set up to review the bank’s inspection policy. No specific areas for the review were mentioned.

But Chino wants the consultations on the review to be “within and outside the ADB and to fully reflect the views of all stakeholders, including non-governmental organisations,” ADB spokesperson Ann Quon told AFP.

“Hopefully, this is a win-win situation not only for the bank but for all in terms of the policy on governance and public accountability,” she said.

The Thai plant was the first project to be scrutinised under ADB’s inspection policy and could set the pace for more project scrutiny, non-governmental organisations charged.

“The biggest fear, however is that the Samut Prakarn case will trigger other requests for independent inspection panels,” said Walden Bello, director of Focus on the Global South, a Bangkok-based regional policy research body.

But Quon said “all complaints are treated seriously and evaluated on their merit according to our inspection policy which has established criteria.”

The bank had ordered a three-member independent panel of outside experts to probe the Thai project last year following written complaints by representatives of some 60,000 villagers living near it.

The panel, comprising Taiwanese, Australian and Dutch experts, gave a damning report of the project, accusing the bank of six cases of non-compliance with its own policies and procedures.

They included areas of supplementary financing of cost overruns, operational missions, environmental considerations and involuntary resettlement.

A panel of six ADB board members who reviewed the report of the independent experts upheld most of their findings, officials said.

However, Chino said that the bank’s full 12-member board was divided on the key question of compliance with ADB’s operational policies and procedures.

Greenpeace and other social action groups had charged that the project, aimed at improving the environmental quality and public health in the area, would in fact destroy the rich natural resources on which villagers depended on for their livelihoods.

Quon said ADB looked into the allegations of corruption levelled against the bank but found them unsubstantiated. “There was no case to answer.”

Allegations of corruption in connection with the purchase of land for the project are being looked into by Thailand’s National Counter Corruption Commission, officials said.

Despite the controversies, the project will continue to be implemented and is scheduled for completion at the end of 2003.